Labour Chancellor Rachel Reeves, who, it emerged this week, replaced a picture of Nigel Lawson in her office with one of Communist Party founder Ellen Wilkinson, has delivered her £40bn tax-hiking budget. Is it one that her heroine would be proud of? We list some of the winners and losers.
Outgoing Conservative leader and former PM Rishi Sunak said the Budget contained “broken promise after broken promise”.
Today his actions speak for themselves with a Budget that contains broken promise after broken promise and reveals the simple truth that the Prime Minister and the Chancellor have not been straight with the British people.
Time and again we Conservatives warned Labour would tax, borrow and spend far beyond what they were telling the country and time and again they denied they had such plans.
But today the truth has come out, proof that they planned to do this all along because today’s Budget sees the fiscal rules fiddled, borrowing increased by billions of pounds, inflation-busting handouts for the trade unions, Britain’s poorest pensioners squeezed, welfare spending out of control and a spree of tax rises they promised the working people of this country they would not do. …
This is the truth: They have fiddled the figures, they have raised tax to record levels.
They have broken their promises and it is the working people of this country that are going to pay the price.
The Chancellor and Prime Minister have tried to say that they had no choice but be in no doubt, their misleading claims about the state of the economy are nothing but a cynical political device. …
When we left office the United Kingdom was the fastest growing advanced economy in the world.
These are her choices so stop blaming everyone else and take responsibility for them.
The Office for Budget Responsibility said the Budget “delivers a large, sustained increase in spending, taxation and borrowing”.
As a result of public spending increasing by almost £70bn a year over the next five years, “the size of the state is forecast to settle at 44% of GDP (gross domestic product) by the end of the decade, almost five percentage points higher than before the pandemic”.
Half of the increase comes from tax hikes of around £36 billion a year, pushing the tax take to a “historic high of 38% of GDP by 2029-30”.
The other half comes from £32 billion a year of increased borrowing, “one of the largest fiscal loosenings of any fiscal event in recent decades”.
Tory MP and leadership candidate Robert Jenrick wrote on X: “Labour complete the biggest heist in modern political history. They won power promising not to raise taxes. They lied.”
Winners
Minimum wage workers: 6.7% increase to the national minimum wage up to £12.21 an hour from April 2025, an extra £1,400 a year for a full-time worker. The wage for 18 to 20 year-olds to rise by £1.40 per hour.
State pensioners: State pension to rise by 4% in April due to triple lock.
Drivers: The freeze on fuel duty has been extended for two years.
Drinkers: Draught beer duty cut by 1.7 points.
Green Blob: Funding announced for 11 new unicorns green hydrogen projects across England.
David Goldstone: The new head of the Office for Value for Money sits on the board of HS2 as a Non-Executive Director, a project whose second leg was cancelled last year by Rishi Sunak as a result of the delays and overspend.
State schools: £6.7 billion of capital investment for the Department for Education next year.
NHS: £25 billion for the NHS, comprising £22.6 billion for the day-to-day health budget and £3.1 billion for capital investment.
Ministry of Defence: Budget increase of £2.9 billion next year.
Losers
Employers: Employers’ National Insurance raised by 1.2 points from 13.8% to 15% and the threshold lowered from £9,100 to £5,000, which may be reflected in reduced pay for employees. This is expected to raise £25 billion for the Treasury.
Families: Unspent pensions to be within the scope of inheritance tax from April 2027. Thresholds for estates will remain frozen until 2030 (meaning more will be drawn into paying the tax). Farmers with assets over £1 million to be subject to a 20% inheritance tax, threatening the sale of many farms on the death of the owner.
Investors: Capital gains tax raised: lower rate up from 10% to 18%, higher rate from 20% to 24%. The rate paid on second homes has not risen.
Landlords: Stamp duty surcharge for second properties up by two points, to 5%, to come into effect tonight.
Workers: Income tax thresholds to remain frozen until 2028. The Chancellor has committed to unfreezing them from 2028.
Private schools: Fee-paying schools to lose VAT exemption from January and business rate relief from April.
Oil and gas companies: Windfall tax on oil and gas companies (Energy Profits Levy) to increase to 38% (expiring in March 2030) and 29% investment allowance removed.
Smokers and vapers: Tax on hand-rolling tobacco to increase by 10 points while a flat rate levy will be imposed on all vaping liquids from October 2026. (Note disposable vapes will be banned from June next year.)
Non-doms: Non-dom tax status to be scrapped from April next year.
Social housing tenants: Right to Buy discounts to be reduced.
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